Report into FITs cuts finds 'justification' for subsidies

A new report looking at the "reasons and justifications" of government cuts to Feed-in Tariffs (FITs) has been welcomed by the solar industry, after it finds justification for subsidies to continue.

Published today (December 22) the 'Solar Power FITs' report by Energy and Climate Change Committee (ECCC) and Environmental Audit Committees (EAC) examines the decision made by the Department of Energy and Climate Change (DECC) to cut solar photovoltaic (PV) subsides by 50%, drawing the conclusion there is justification for the scheme.

This, the report argues is provided as "the scheme's aims include a contribution to wider low-carbon goals including allowing individuals an opportunity to engage in the drive for more renewable energy".

As a result, it states that "there is room for debate, therefore, about the role that solar PV should play in the future, to meet our carbon and renewables commitments in the most cost-effective way, particularly at a time of economic difficulty."

The report calls for the Government to develop a system to review and adjust FIT rates in an orderly and timely way, consider alternative energy efficiency requirements, require energy suppliers to provide annual returns on how much FITs have added to annual bills and design a 'community tariff' that takes in to account the wider impacts on community groups and social housing projects.

It also advises greater collaboration between DECC and the Department of Business, Innovation and Skills (BIS) on how the FITs scheme could be used to encourage solar panel manufacturing in the UK.

Commenting on the report, solar energy supplier Solarcentury chairman Jeremy Leggett, Chairman, said:" When DECC dropped its bombshell on October 31, we said that the shock announcement was unfair, retrospective and damaging to investment in PV and other renewables.

"It's very pleasing to see that the select committees have voiced similar concerns, adding considerable political pressure on the Government to ensure that such a shambles is never repeated in the future."

Renewable energy community YouGen founder Cathy Debenham also welcomed the "thorough analysis of the FITs process and proposals in the consultation".

She added: "We are delighted that these are all issues addressed by the committees and hope that DECC will take them on board. Given that DECC did not do a sufficient appraisal before including the feed-in tariffs in its spending review and capping the FITs budget, we trust that they will revisit that decision and make more money available for this popular technology which is rapidly falling in price."

However, consumer group Consumer Focus disagrees with the ECCC report, arguing "cuts in the solar subsidy are necessary". Nevertheless, it does admit the cuts "should not be made at the speed planned by the Government", adding that "the scale of the cuts needs further consideration - particularly for social housing and community schemes".

Consumer Focus energy expert Liz Lainé, said: "Six weeks is clearly not long enough to make such major changes and many consumers who had already signed contracts would have lost out under these moves. With such a big investment people need certainty so the Government must tell consumers what tariff now applies and a realistic timetable for any change."

In addition, the report concludes that DECC set up the solar FITs scheme without a "mechanism to review and adjust degression rates in an orderly and timely way", adding that it "urgently needs to develop a system which allows for more regular and predictable review".